Friday, March 12, 2010

Oracle Corp. (NASDAQ: ORCL): Q3 Earnings Preview 2010

Oracle Corp. (NASDAQ: ORCL), the world's largest enterprise software company, is scheduled to release financial results for the fiscal third quarter 2010 after the closing bell on Thursday, March 25, 2010. Analysts, on average, expect the company to report earnings of 37 cents per share on revenue of $6.36 billion. In the year ago quarter, the company reported earnings of 35 cents per share on revenue of $5.50 billion.

Oracle Corporation engages in the development, manufacture, distribution, servicing, and marketing of database, middleware, and application software worldwide. Oracle is organized into two businesses: software and services.

In the preceding fiscal second quarter, the Redwood Shores, California-based company reported that its net income rose to $1.5 billion or $0.29 per share, compared to $1.3 billion or $0.25 per share, in the year-earlier quarter. Excluding employee stock options expense, amortization of intangible assets, restructuring charges and other items, non-GAAP net income for the second quarter was $2.0 billion or $0.39 per share, compared to $1.7 billion or $0.34 per share in the prior year quarter. Revenue rose 4% to $5.86 billion from $5.61 billion a year ago. Analysts, on average, expected the company to report earnings of $0.36 per share on revenue of $5.69 billion.

The company is attempting to reinvest itself as a "systems" company, one that has a complete "stack" of products, both hardware and software. Oracle has purchased more than 60 companies in the past five years to reposition itself in the technology industry.

In January, Oracle completed the acquisition of Sun Microsystems Inc, a Santa Clara-based manufacturer of servers and storage equipment. Oracle CEO Larry Ellison recently said that the company expects Sun to add $1.5 billion to its operating profit this year.

Last month, Oracle Corp. announced that it has agreed to acquire Israel-based Convergin, a catalyst in developing J2EE-based Service Broker and network integration software for the communications industry. The acquisition will enable Oracle to step up the deployment of next-generation pre-paid and value-added services in the communications industry besides lowering the total cost. The company said that the transaction is expected to close in the first half of 2010. The financial details of the deal were not disclosed.

In February 2010, Oracle agreed to acquire AmberPoint Inc, an Oakland-based developer of visibility, management and security software. Oracle said that the addition of AmberPoint’s software will help diagnose and manage the performance of business applications, provide monitoring for application performance and will enrich SOA design time with run-time metrics for SOA governance.

The company's stock currently trades at a forward P/E (fye 31-May-11) of 13.30 and PEG Ratio (5 yr expected) of 1.15. In terms of stock performance, Oracle shares are up 62% over the past year.

Full Disclosure: None.
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